Hold Onto It Beyond the Law’s Reach

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Principalities and Powers (Government)

I heard the President once again criticize the senate for not compromising on health care.  He said that bipartisanship does not mean one side gets their way all the time.  He said he is willing to compromise some of his party’s desires to get a bill passed.

1)      Who said Bipartisanship is a worthy cause?

2)      Who said we want to pass this bill?

3)      Who said compromise of important points was a valid option?

4)      The president, when he believes things are important enough, declares he will sign an executive order.  Executive Orders are unconstitutional.  Presidents can’t make laws.  So, when he believes something is important he will hold onto it beyond the law’s reach.  Why can’t conservatives hold onto something within the law’s reach?

5)      The critics keep saying that filibustering is obstruction.  Yes, that’s the point.

6)      The critics keep calling the conservatives obstruction-IST. Only as long as the other side will admit in public that they are Social-ISTS.  Then, obstructionists are the type I would want to vote for.

Americans Don’t Like Bailing Out Wall Street

The following article by Gary Benoit at The New American can be found in its original here.

“The initial defeat of the bill was the result of the groundswell of opposition from angry constituents. The intensity of the public pressure on lawmakers to vote against the bill took the power brokers by surprise, but in the end the pressure applied by the power brokers proved to be the more powerful force.”

Power Brokers 1, Constituents 0 on Bailout

by Gary Benoit – The New American

Tuesday, 07 October 2008 13:49

“Madame Speaker, only in Washington could a bill demonstrably worse than its predecessor be brought back for another vote and actually expect to gain votes,” Congressman Ron Paul lamented on the floor of the House on Friday, October 3, the day the gargantuan financial bailout package was passed by the House, completing congressional action.

“That this bailout was initially defeated was a welcome surprise, but the power-brokers in Washington and on Wall Street could not allow that defeat to be permanent. It was most unfortunate that this monstrosity of a bill, loaded up with even more pork, was able to pass.”

The passage of the bailout bill was the result of strong lobbying by the congressional leadership of both the Democrat and Republican Parties as well as by the White House and Wall Street. The initial defeat of the bill was the result of the groundswell of opposition from angry constituents. The intensity of the public pressure on lawmakers to vote against the bill took the power brokers by surprise, but in the end the pressure applied by the power brokers proved to be the more powerful force.

The House initially voted on the bill just one day after congressional leaders and the White House announced that they had agreed on a plan, proposed by Treasury Secretary Henry Paulson one week earlier, to authorize the Treasury Department to spend up to $700 billion to purchase troubled mortgage-related securities from banks and other financial-related institutions. At the time, congressional leaders expected the bill to pass. “Leaders on both sides of the Capitol openly expressed confidence that they had the votes, and House leaders scheduled a vote for the next day,” reported Congressional Quarterly. “But what leaders did not take into account was the level of constituent anger over the perception that Washington wanted to spend taxpayer dollars to bail out Wall Street. Nothing in the deal assuaged those concerns.”

And so the bipartisan congressional accord that was announced shortly after midnight on Sunday, September 28, was defeated 205-228 on Monday, September 29. But the power brokers, unwilling to accept defeat, next focused on the Senate, whose membership is not so susceptible to constituent pressure as the House since only a third of the Senate is up for reelection every two years. Also, the bill was expanded in the Senate to make it more palatable to lawmakers.

The Senate version of the bill not only authorized the $700 billion bailout plan but also expanded FDIC protection from $100,000 to $250,000 per bank account, extended dozens of expiring tax provisions, expanded incentives for renewable energy, provided a one-year adjustment to exempt millions of Americans from the alternative minimum tax, and required health insurers who provide mental health coverage to put mental-health benefits on par with other medical benefits.

Ron Paul pointed out in his “Texas Straight Talk” weekly column that the Senate bailout bill “had new taxes, so according to the Constitution it should not have originated in the Senate.” The Constitution explicitly states: “All bills for raising revenues shall originate in the House of Representatives.” Because the House had defeated the bailout bill, the House did not send it to the Senate. But that did not stop the Senate from attaching the bailout as an amendment to another House-passed bill (on mental-health parity) and then voting on the whole package. That package was approved 74-25 on October 1, just two days after the House had defeated the earlier bailout bill.

Then on Friday, October 3, just four days after the House had defeated the bailout bill, the House reversed itself and adopted the Senate version 263-171. Fifty-eight House members who had voted against the bailout bill on Monday voted for the Senate version of the bailout bill on Friday, making the reversal possible.

The lobbying effort on behalf of the bill throughout the week was intense — but so was the torrent of communications from constituents. Because of the constituent pressure, many congressmen who had originally voted against the bailout refused to buckle and stuck with their original position.

Congressional Quarterly reported that Republican Congressman Joe Barton of Texas “heard from Bush, [Minority Leader John] Boehner, and Minority Whip Roy Blunt of Missouri. At the same time, though, he received ‘a couple of hundred’ calls from constituents. Barton voted no both times.”

Another congressman who did not buckle was Democrat William Lacy Clay of Missouri. However, according to Congressional Quarterly, Clay noted that some of his African American colleagues in the House were swayed by personal phone calls from Barack Obama. (Obama’s main opponent in the presidential race, John McCain, also personally called congressmen to persuade them to vote for the bailout bill.) “My calls are still running no, so I am going to follow the views of my constituents,” Clay said — and that’s exactly what he did.

Not surprisingly, Congressman Ron Paul, who had warned long ago about the coming financial debacle, had voted no both times as well. In his statement to the House on October 3, Paul explained that more government intervention will not solve a problem created by government intervention:

The Federal Reserve has already injected hundreds of billions of dollars into U.S. and world credit markets.  The adjusted monetary base is up sharply, bank reserves have exploded, and the national debt is up almost half a trillion dollars over the past two weeks.  Yet, we are still told that after all this intervention, all this inflation, that we still need an additional $700 billion bailout, otherwise the credit markets will seize and the economy will collapse.  This is the same excuse that preceded previous bailouts, and undoubtedly we will hear it again in the future after this bailout fails.

One of the most dangerous effects of this bailout is the incredibly elevated risk of moral hazard in the future.  The worst performing financial services firms, even those who have been taken over by the government or have filed for bankruptcy, will find all of their poor decision-making rewarded.  What incentive do Wall Street firms or any other large concerns have to make sound financial decisions, now that they see the federal government bailing out private companies to the tune of trillions of dollars?  As Congress did with the legislation authorizing the Fannie and Freddie bailout, it proposes a solution that exacerbates and encourages the problematic behavior that led to this crisis in the first place.

Put simply, we cannot prevent recession or depression by eliminating risks. Nor can we do so by creating more money out of thin air and pumping that money into the economy.

The passage of the bailout bill could be viewed as a cause for pessimism. Yet the unexpected volume of public opposition to it should be viewed as a cause for optimism. The public pressure resulted in the bailout bill’s initial defeat. More public pressure, resulting from more education and more grass-roots organization, could turn the tide in the future.

Ron Paul on CNN with John Roberts – NO BAILOUT!

story copied from CNN:

Ron Paul: Buying bad debt is the wrong solution

From: http://www.cnn.com/2008/POLITICS/10/01/paul.qanda/#cnnSTCText

• Story Highlights
• Paul: Bailout is bad for taxpayers, sticks to policies that caused economic troubles
• “You have to allow the market to adjust prices downward,” he says
• Crisis putting pressure on dollar, could force world to give up on it, Paul says
• Paul: Increasing insurance limits would “cover over the mistakes”

(CNN) — Two days after the House rejected the $700 billion bailout bill, the Senate is set to vote on the rescue plan for financial institutions.

The vote is scheduled for after sundown Wednesday.

Republican presidential nominee Sen. John McCain, Democratic nominee Sen. Barack Obama, and Obama’s running mate, Sen. Joe Biden, all said they would be present for the vote.

Speaking to CNN’s John Roberts on Wednesday, House Financial Services Committee member and former Republican presidential candidate Rep. Ron Paul discussed why he thinks the bailout bill is the wrong solution to the economic problem and what he would do to secure financial security.

John Roberts: Congressman, great to see you. I was browsing around on your Web site, Campaign for Liberty. And right there on the very front page, you are appealing to your supporters — and there are tens of thousands of them — to get in touch with key senators to tell them to vote this bill down when it comes to a vote in the Senate at sundown tonight.

Why do you want them to vote it down?

Rep. Ron Paul: I think it’s a bad bill. I think it’s bad for the taxpayers. I think it’s doing more of the same thing. The same policy that we’re following now with this bill is exactly how we got into that trouble. Watch Ron Paul explain why he opposes the bailout »

And you know, I really don’t have that much clout in Washington, D.C. And I recognize it. But there are a couple people outside of Washington that care about what I’m thinking and care about free market … economics. And they will respond. And I think we did help generate a little bit of mail to the House members.

So you go where you can have the influence. And I think that people — the grassroots — understand this a lot better than members of Congress give them credit for.

Roberts: So, instead of the bills that are currently before the Senate, the one that may be before the House as early as Thursday, what would you do?

Paul: Well, we need to do a lot, but a lot differently. We have to recognize how we got into this problem. We have too much debt. We have too much malinvestment.

Roberts:OK, OK. So we recognize all of the things that got us here. But, right now, today, what would you do, if not this bill?

Paul: You have to liquidate those mistakes. Those mistakes were made due to monetary policy. So you have to allow the market to adjust prices downward. And that’s what we’re not allowing to do.

If there are too many houses and the prices are too high, the sooner we get the prices down to the market level, as soon as we quit trying to encourage more housing — this is what we’re doing. They’re trying to stimulate houses and keep prices high. It’s exactly opposite of what we should do.

So, we should get out of the way and not buy up bad debt. There’s illiquid assets, but most of those are probably worthless. They’re mostly derivatives. And we’re sticking those with the taxpayer. So we have to recognize that the liquidation of debt is crucial. And if we did that, we would have tough times, there’s no doubt about it, for a year. But if we keep propping a system up that’s not viable, we’re going to have a problem for decades, just like we did in the Depression. That’s what we’re on the verge of doing.

Roberts: Congressman Paul, what do you think of this idea that’s being floated — this process called mark to market, which would, they would modify the rules so that the, right now, paper that a lot of these institutions are holding, which is worth nothing, they would actually be able to assign some sort of value to it.

Some people are saying that that would just hide the problem. Other people are wondering if maybe that might create some sort of voodoo accounting that would allow widespread abuse in the system.

What do you think?

Paul: It demonstrates the problem. You know, when they prevented them from marking them down, this was an SEC [Securities and Exchange Commission] regulation. Shows how regulations backfire.

If you had a market economy and then if you had a market-adjusted FDIC, where insurance was based on the strength of the bank, this would have happened on a daily basis. But instead, we insure everybody, no matter what the bank is doing, and we do it, either we overkill — we give you too much credit on bad investments — and then we make changes all of a sudden, and they’re drastic, to what they have done.

So, it’s impossible. It’s either too little or too much. And what you need is insurance of, FDIC type of insurance, has to be driven by the marketplace to measure the viability of a bank.

Roberts: So what do you think?

Paul: This adds to all the moral hazard that we have in the system.

Roberts: So what do you then think of this idea of raising the limit on [FDIC] insurance to $250,000, from its current cap of $100,000?

Paul: Well, on the short run it will calm the markets. People will feel better. I might even personally feel better for a week or two.

But I know that long term, it’s the wrong thing to do. I opposed this in the early ’80s when they went from 30 [thousand dollars] to 100 [thousand dollars], saying it would lead to more problems like this with malinvestment. It would cover over the mistakes. And the same thing will happen.

But if we raise it to 250 [thousand dollars], people are going to feel better, then it will keep the bubble going for a little while longer and putting more pressure on the dollar. If the dollar lasts longer, then finally the world will give up on the dollar — and then we will have a big problem that nobody has even really begun to think about.

Roberts: A lot of people might hope that you’re wrong with your projection.

Paul: I do too. I hope I’m wrong.

Roberts: You tend to be right on these things on occasion, though. Dr. Paul, it’s good to talk to you. Appreciate it.

Paul: Thank you.